Friday, May 25, 2012

Obama spending binge never happened

Commentary: Government outlays rising at slowest pace since 1950s

WASHINGTON (MarketWatch) — Of all the falsehoods told about President
Barack Obama, the biggest whopper is the one about his reckless spending
spree.

As would-be president Mitt Romney tells it: “I will lead us out of this debt and spending inferno.”

Almost everyone believes that Obama has presided over a massive increase
in federal spending, an “inferno” of spending that threatens our jobs,
our businesses and our children’s future. Even Democrats seem to think
it’s true.

Government spending under Obama, including his signature stimulus bill,
is rising at a 1.4% annualized pace — slower than at any time in nearly
60 years.

But it didn’t happen. Although there was a big stimulus bill under
Obama, federal spending is rising at the slowest pace since Dwight
Eisenhower brought the Korean War to an end in the 1950s.

Even hapless Herbert Hoover managed to increase spending more than Obama has.

The big surge in federal spending happened in fiscal 2009, before Obama
took office. Since then, spending growth has been relatively flat.

What people forget (or never knew) is that the first year of every
presidential term starts with a budget approved by the previous
administration and Congress. The president only begins to shape the
budget in his second year. It takes time to develop a budget and steer
it through Congress — especially in these days of congressional
gridlock.

The 2009 fiscal year, which Republicans count as part of Obama’s legacy,
began four months before Obama moved into the White House. The major
spending decisions in the 2009 fiscal year were made by George W. Bush
and the previous Congress.

Like a relief pitcher who comes into the game with the bases loaded,
Obama came in with a budget in place that called for spending to
increase by hundreds of billions of dollars in response to the worst
economic and financial calamity in generations.

By no means did Obama try to reverse that spending. Indeed, his budget
proposals called for even more spending in subsequent years. But the
Congress (mostly Republicans but many Democrats, too) stopped him. If
Obama had been a king who could impose his will, perhaps what the
Republicans are saying about an Obama spending binge would be accurate.

Like in 2004, energizing the base will drive political victory

President Barack Obama doesn't normally dwell on similarities to
his predecessor in the Oval Office, but Jerry Seib explains one area
where Obama and George W. Bush have an awful lot in common.

Yet the actual record doesn’t show a reckless increase in spending. Far from it.

Before Obama had even lifted a finger, the CBO was already projecting
that the federal deficit would rise to $1.2 trillion in fiscal 2009. The
government actually spent less money in 2009 than it was projected to,
but the deficit expanded to $1.4 trillion because revenue from taxes
fell much further than expected, due to the weak economy and the
emergency tax cuts that were part of the stimulus bill.

The projected deficit for the 2010-13 period has grown from an expected
$1.7 trillion in January 2009 to $4.4 trillion today.
Lower-than-forecast revenue accounts for 73% of the $2.7 trillion
increase in the expected deficit. That’s assuming that the Bush and
Obama tax cuts are repealed completely.

When Obama took the oath of office, the $789 billion bank bailout had
already been approved. Federal spending on unemployment benefits, food
stamps and Medicare was already surging to meet the dire unemployment
crisis that was well underway.
See the CBO’s January 2009 budget outlook.

Obama is not responsible for that increase, though he is responsible
(along with the Congress) for about $140 billion in extra spending in
the 2009 fiscal year from the stimulus bill, from the expansion of the
children’s health-care program and from other appropriations bills
passed in the spring of 2009.

If we attribute that $140 billion in stimulus to Obama and not to Bush,
we find that spending under Obama grew by about $200 billion over four
years, amounting to a 1.4% annualized increase.

After adjusting for inflation, spending under Obama is falling at a 1.4%
annual pace — the first decline in real spending since the early 1970s,
when Richard Nixon was retreating from the quagmire in Vietnam.

In per capita terms, real spending will drop by nearly 5% from $11,450
per person in 2009 to $10,900 in 2013 (measured in 2009 dollars).

By the way, real government spending rose 12.3% a year in Hoover’s four
years. Now there was a guy who knew how to attack a depression by
spending government money!

Rex Nutting is a columnist and MarketWatch's international commentary editor, base